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Companies based in the UAE’s DMCC Free Zone have all been recently notified about upcoming changes to how employee wages will be paid. The WPS system (which stands for Wages Protection System) in the UAE has been updated. However, like anything compliance-related, the rules and requirements can be difficult to interpret. If the new WPS has you floating between question marks, we’re here to arm you with the right information in the simplest terms, and make it as easy as possible to navigate.
Here we’ve gathered all the important information we could find regarding the new WPS requirements, so you don’t have to!
Let’s dive right in:
First…what is the WPS, anyway?
In short, the newly implemented WPS is a system that was put in place to make sure that employees get paid on time! WPS stands for "Wage Protection System" and it's basically an electronic way for companies to transfer employee salaries straight to their banks, exchange houses, or other authorized financial institutions.
The Central Bank of UAE (CBUAE) created WPS to help out the Ministry of Human Resources and Emiratisation Labour (MoL) by making sure that employees get paid on time and in a safe and secure way. And now, the DMCC Free Zone has joined in and teamed up with the CBUAE to make sure that all companies within the DMCC Free Zone begin to use the WPS to pay their employees.
What’s the purpose of the WPS?
- To offer a new and improved method of helping employers protect their interests and pay their employees efficiently.
- To protect employees and make sure they get paid on time—in a way that's safe, secure, and efficient.
- To ensure that salaries are routed through the banking system like clockwork. So both employers and employees can rest easy knowing that salaries are on their way.
- To make sure all employees are receiving the correct salaries as stated in their employment contracts.
- To make sure Dubai stays a great place to live and work.
As a result of the new and improved WPS, what’s required from member companies?
If a company is a part of the DMCC Free Zone, they’ll need to register all their employees who have active or expired employment visas, or Permanent Identity Cards (PICs) for salary transfer with a bank or exchange house. This will ensure that employees receive their pay on time and in a secure manner.
Keep in mind, however, that company shareholders don't need to be registered for salary transfers.
How do DMCC member companies register with WPS?
MOHRE (The Ministry of Human Rights) provides companies with a tool to create salary files, as well as company credentials to access this tool. The system is available online on www.mohre.gov.ae, where employers can log into their account, using their company card details.
Which DMCC member companies don’t need to register their employees for the salary transfer through the WPS?
- Companies that are “dormant,” as in, companies that are not doing business and don’t have an active source of income
- Companies that are de-registered
- Companies that are not registered under the DMCC Free Zone
When should a DMCC member company register their employees for salary transfer?
DMCC member companies should make sure all active employees (i.e. those with an active or expired employment visa or Personal Identity Card) get registered for salary transfer before the due date announced by DMCC Authority.
And any new hires need to be registered under the following conditions:
- Right after they receive their Company Employment Card (CEC)
- Right after their Permanent Identity Card (PIC) application is closed
By doing this, DMCC member companies can make sure all employees are set up for salary transfer and ready to receive their pay.
What requirements need to be met before registering employees with WPS?
- The company needs to be licensed by the DMCC Free Zone
- Employees need to have a visa or PIC provided by the company (which must be a DMCC member company)
- The employee’s bank must be licensed by the Central Bank of the UAE
- If choosing to work with an agent (such as a bank, exchange house or 3rd party service provider), the agent must be licensed by the CBUAE.
Step by step, how does the WPS process work? OR Step by step, what does the WPS process look like?
Step 1: A company opens a bank account with an approved bank or agent (if it doesn't already have one in the UAE)
Step 2: The company and the bank or agent enter into a WPS agreement.
Step 3: The company issues salary transfer instructions to the bank or agent.
Step 4: The bank or agent notifies WPS, which sends workers' details and wages as well as the salary transfer instructions electronically to the UAE Central Bank.
Step 5: The UAE Central Bank then double-checks those details with MOHRE (Ministry of Human Resources and Emiratisation Labour) to make sure everything matches up with their records.
Step 6: WPS gives the green light for the company’s bank or agent to make the payment to all registered employees.
Step 7: The bank or agent transfers the salary directly to all employees' accounts.
What are the requirements to register a salary transfer for an employee who already has a bank account?
It’s super simple, here’s how:
1. Log in to the DMCC member portal
2. Go to ‘My Reports’ and extract the report for ‘WPS Salary - Current Month’ or ‘WPS Salary - Previous Month’
3. Provide the employee’s IBAN number
4. Approach the bank to submit a request for the salary file(s) creation
5. The bank will create the salary file(s)
6. Transfer the salary as per the due date agreed in the employment contract
What are the requirements to register a salary transfer for an employee who does not have a bank account?
The process is easy, here’s how:
1. Log in to the DMCC member portal
2. Go to ‘My Reports’ and extract the report for ‘WPS Salary - Current Month’ or ‘WPS Salary - Previous Month’
3. Provide the agent’s (Bank/Exchange House) ID number
4. Approach the agent to submit a request for the salary file(s) creation
5. The agent will create the salary file(s)
6. Transfer the salary as per the due date agreed in the employment contract
Are there any applicable fees for the salary transfer?
When a company sends out salary payments through the Wages Protection System (WPS), the banks or exchange houses might charge them for it. But don't worry, organizations can negotiate with the service provider and try to agree on a price that works for everyone!
Can salaries be paid in foreign currency?
No, companies must pay salaries/wages in the UAE's official currency and only within UAE borders. Once the employees get their money, they can send it out of the country using official channels.
If an employee registered for monthly salary transfer goes on an annual leave/vacation, can the company pay the salary in cash?
No, companies cannot pay employee leave salaries in cash because that won't show up in the UAE WPS, which could lead to consequences later on. So make sure to use WPS to pay out those annual leave salaries.
Will the DMCC member companies be notified to transfer their due employees’ salaries?
Yes, all DMCC member companies’ license managers and HR owners will be notified to transfer their due employees’ salaries.
Companies will get a reminder to pay employees a week before their salary due date, and if that deadline is missed, a new reminder will be sent 3 days after the due date.
What happens if a member company failed to transfer their employees’ due salaries as per the employment contract?
There is no consequence during 2023. However, starting January 2024, DMCC may implement portal sanctions and fines which will be deducted from the company’s portal account.
If we are a group of companies under a mother company, can we collate our employees’ salary information file registration from all different entities owned by the mother company?
No, every company in the group has to file and register their employees' salary information separately. Combining all the employees from different companies into one record won't work.
If an employee’s visa has expired, is the employer required to transfer the employee’s monthly salary?
Yes, the company is required to transfer the employee’s monthly salary.
Is it required for a member company to pay the end of service benefits (EOSB) through Wages Protection System (WPS)?
No, companies aren’t required to pay EOSB using the Wages Protection System (WPS). It can be transferred only through the UAE Funds Transfer System or any other alternate channel instead. In cases where an employee has taken loans or used a card, the employer must inform the bank where the salary is/was being transferred by sending a letter.
If an employee’s visa is canceled, is the company required to transfer the employee’s monthly salary?
No, the employer is not required to transfer the employee’s monthly salary, as the employee record is removed from the company’s list once the visa is canceled.
Can the company deduct any fees from the employees for the salary transfer?
Any charges imposed by banks and exchange houses can’t be deducted from the wages/salaries of the employees—the employer is required to cover these charges.
What are the steps for DMCC member companies to register their employees for the WPS?
1. Assign someone from your team to register your employees for the salary transfer through WPS;
2. Login to DMCC Member Portal to generate the report with the Employer and Employees ID
3. Go to ‘My Reports’ and extract the report for ‘WPS Salary - Current Month’.
4. After downloading the report, you may insert the following:
a. IBAN per employee (this is applicable for employees who have a registered UAE bank account. You can request your employee to obtain it from their bank).
b. Agent ID (this is applicable for employees who do not have a registered UAE bank account. You can obtain it from Exchange House when approached).
c. Variable income (this is optional and applicable for employees receiving additional payment that is not incorporated in the salary structure. E.g., bonus, commission, accommodation allowance, etc.)
d. Number of annual leave days availed by the employee (this is optional and applicable for employees availing from the annual leave balance in the current month in which the report was generated)
5. Contact the Bank/Exchange House to submit the report for the salary file(s) creation (SIF);
6. Transfer the salary(s).
What is a SIF file?
A Salary Information File (SIF) is a report that employers in the UAE are required to submit to a WPS agent at the end of each month. The report tracks the wage details paid to individual employees to ensure that they are being paid according to the country's labor laws.
A SIF file is simply a digital file that contains the salary information for each of your employees. Each SIF file should consist of information about a single employee. What this means is that you’ll need to create a Salary Information File for each one of your employees and use a specific naming convention.
All companies that belong to JAFZA (Jabel Ali Free Zone Area) and now, DMCC Free Zone, are required to create a SIF file to process their payroll in the UAE. The .SIF file has to be prepared monthly and uploaded to the WPS system.
What is the purpose of the SIF file?
The SIF must be sent by companies to their respective banks in order to distribute salaries to employees. These files contain salary information for every employee based on the agreed-upon contracts, and this process helps MOHRE ensure that workers are paid accurately, securely, and on time.
Creating a SIF is not just important, it’s mandatory. The files are part of the basic payroll processes in the UAE to ensure that businesses are complying with the local laws and regulations.
Employees should be paid their agreed-upon salaries on time after working hard throughout the month. An SIF file ensures that companies have a centralized digital record of their payroll details. The purpose of all of this is that it can lead to fewer errors and help employers understand how salaries are paid.
What does a SIF file consist of?
- Each employee will have an Employee Detail Record (EDR).
- Each SIF will have only 1 Salary Control Record (SCR).
- Each Company Trade License will have its own SIF linked to the employees on the Ministry of Labour (MOL) list for that Trade License.
- Every on-shore employee has a Ministry of Labor Code or Personal ID which is used by the Central Bank to identify if an employee is being paid.
- Every SIF will contain a Routing Code which is the Bank or Exchange House that is responsible for processing the payroll. The SIF will also include the currency in which employees are paid.
- Each SIF will have a specific date range associated with the pay period for the employees and the month the employer is making the payment.
- The final total salary for every employee which includes all the payroll details (variable, additions, deletions) is included on the SIF along with the sum of the total salaries for the employees belonging to that SIF.
A SIF file is an essential part of a company’s payroll system. It’s crucial to ensure that whoever is in charge of processing payroll knows how to create the file and send the information to the relevant authorities.
What must be included in the “employee lists”?
Within each employer’s account, employee lists need to be updated with details of the bank or agent the company deals with, the bank or agent each employee has an account with, as well as the date at which salary is paid.
Whenever an employee joins or leaves a company, a new employee list must be downloaded and attached to the application.
If employees terminate their employment, when do they get removed from the employee list?
Employees will need to stay under WPS until the end of their service, including their notice period, however long it may be.
Is there a grace period for late salary payment?
No, there cannot be a difference of more than one month from the dates chosen to pay the salary.
Which companies are required to have a MoL?
DMCC member companies don’t need to have a MoL (MOHRE) ID.
If an employee has been reported absconding, is the company required to transfer the employee’s monthly salary?
The employer can stop paying the monthly salary of an employee who has gone missing only after confirming their status. When an employee's absence is confirmed, they will be automatically removed from the company's list of employees who are scheduled to be paid through bank transfer.
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